Northland Resources SA : Northland to Address Funding Shortfall due to Higher initial Opex and Capex

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Luxembourg, January 24, 2013 - Northland Resources S.A.(TSX: NAU, OSL: NAUR, Frankfurt: NPK, Nasdaq OMX/First North: NAURo - "Northland" or the "Company") announces that it had identified a funding shortfall, and intends to strengthen its financial position. The Company expects to launch an offering consisting of a combination of new debt and new equity, for total gross proceeds up to USD 375 million. In addition, the Company announces its sixth bi-monthly operational and construction update on the Kaunisvaara project.

HIGHLIGHTS

Identified Funding Shortfall

• Additional funding is required due to:
  • Higher than expected operating costs in the production ramp-up phase
  • Higher capital expenditures than expected
  • Lower operating assumption for iron ore price, and adverse movements
    in exchange rates.
• Planned USD 375 million combined equity and bond offering to secure the planned long-term financing, consisting of:
  • Planned USD 250 million of new equity
  • Planned USD 125 million bond tap
• Term sheet signed with Stemcor UK Limited ("Stemcor") for a prepayment facility of up to USD 50 million
• On completion of the financing the Company is expected to be fully funded through the minimum cash point and to full production in the third quarter of 2014
• Operational expenditures life of mine supported by the revised budget

Forecasted production

•        1.5 million dry metric tonnes ("dmt") in 2013

•        3.1 million dmt in 2014

•        Full production rate of 4 million dry metric tonnes per annum ("dmtpa") as of the third quarter of 2014

• 69 percent iron ore concentrate with very low impurities expected to position Northland's product in the top 5 per cent of global iron ore production from a quality perspective.

Operational update - Commissioning according to plan

• The Kaunisvaara process plant is working according to its design and no modification has been necessary
• In December 2012, the Kaunisvaara project produced its first iron ore concentrate which was transported by truck and rail to its Fagernes Terminal in the Port of Narvik. The entire logistical chain works well.
• To-date 18,500 tonnes of iron ore concentrate have been produced in Kaunisvaara
• Approximately 4,500 tonnes of concentrate is currently stored in Narvik
• Approximately 5,000 tonnes of concentrate is currently stored in Pitkäjärvi
• The first customer shipment is expected to leave Narvik for Tata Steel in the Netherlands in mid February 2013
• Road and rail interchange work has been completed at Pitkäjärvi
• Permits necessary for a temporary solution for the Fagernes Terminal in the Port of Narvik are in place
• The announcements of the Hannukainen and Pellivuoma DFSs, have been postponed until the contemplated financing transaction has been completed.

Karl-Axel Waplan, President and CEO of Northland Resources S.A. said, "Northland has progressed the Kaunisvaara project from bog to mine in less than two years. We are now preparing for the next major step to reach full production from our Tapuli mine in the third quarter of 2014. To achieve this we unfortunately need to raise additional financing due to cost overruns and higher initial operating costs. We are comfortable with the estimates for the remaining investments and our forecasted Life of Mine operating cost per tonne."

"The production ramp-up has been successful and to date Northland has produced approximately 18,500 dmt of iron ore concentrate with Fe-grade and quality well in accordance with specifications. Simultaneously, we have been carefully assessing the long-term financing needs of the Kaunisvaara project. We have devoted significant effort to verifying the numbers, pursuing possible mitigating activities and have identified an additional financing requirement of USD 425 million, which is required to cover higher than expected capital and higher initial operating expenditures for the first two years. The Company has estimated that Life of Mine ("LoM") Opex/tonne will be USD 67 and is in line with the Definite Feasibility Study, adjusted for the currency effect".

The Company has retained Arctic Securities ASA and Pareto Securities AS as Joint Lead Managers and Bookrunners, and Ocean Equities Limited and SpareBank 1 Markets AS as Co-lead managers to advise the Company in connection with the expected equity and bond offerings.

This press release has been disseminated to mitigate any risks of information leakage. A separate press release with transaction details will be released shortly to the market as soon as all relevant documents are completed. Upon completing this funding, the Company expects to be fully funded through the minimum cash point and until the anticipated full production is achieved in third quarter of 2014.

Conference Call

Tomorrow, Friday, January 25, 2013, Northland will host a webcast presentation and conference call scheduled to begin at 3.30 pm Central European Time / 9.30 am Eastern Standard Time that will be chaired by Anders Hvide, Executive Chairman and Karl-Axel Waplan, Chief Executive Officer.

Details about the webcast and conference call will be provided in separate press release and under the Investor section on www.northland.eu prior to the call.

FINANCING UPDATE

At this time, the Company announces that it has identified an additional funding need of approximately USD 425 million to enable it to reach the Kaunisvaara project's expected minimum cash point which is expected to occur in the second half of 2014, and until the anticipated full production is achieved in third quarter of 2014. The funding is required due to higher than expected operating costs in the production ramp-up phase, higher capital expenditures than expected and adverse movements in iron ore prices and exchange rates. The funding need is expected to be covered by an increase in the listed 13 per cent Northland Resources AB (publ.) Senior Secured Bond Issue 2012/2017 of up to USD 125 million and up to USD 250 million in new equity in the Company and utilizing the pre-payment facility from Stemcor of up to USD 50 million.

As previously announced, Northland Resources AB (publ) executed the third and final drawdown from the USD 350 million 13 per cent Northland Resources AB (publ.) Senior Secured Bond Issue 2012/2017 on November 29, 2012, of approximately USD 25 million.

In addition, the Company announced on December 11, 2012 that Northland Resources AB (publ) had completed the subscription for the USD 20 million 12.25 per cent Northland Resources AB (publ.) Senior Secured Bond Issue 2012/2016. The Company announced on December 21, 2012 that the USD 20 million bond loan had closed. The bond loan is senior debt, secured on a pari passu basis with the 13 per cent Northland Resources AB (publ.) Senior Secured Bond Issue 2012/2017, but with no voting or enforcement rights. The proceeds from the USD 20 million bond loan will finance capital expenditure ("Capex") investments for Kaunisvaara project as well as working capital purposes.

Funding shortfall

During the fourth quarter 2012, the Company finalized its bottom-up budgeting process for 2013. The first consolidation of the budget indicated a lower operating cash flow during 2013-2014 than previously expected, due to higher than previously expected operating costs in the ramp-up phase, adverse movements in the USD/SEK foreign exchange rate, and a lower iron ore price estimate. However, the effect of expected increased production volumes and quicker ramp-up partly balanced the higher operating costs.

Simultaneously, the Company received notifications from contractors of increases in capital expenditure in the period until final completion of the second process line, mostly due to higher "open book" costs and higher than expected material uses.

The Company has conducted extensive diligence reviews of the numbers and considered alternative and mitigating options, but has now concluded that further financing is needed to cover a funding shortfall of approximately USD 425 million. The Company is in the process of finalizing certain financing sources, including a pre-payment facility from Stemcor of up to USD 50 million, which is subject to satisfaction of, amongst other things, certain production and delivery milestones (for which credit approval has been obtained and term sheet has been signed). A ship loader lease facility (expected net value USD 18 million) is expected to be completed in due course, but has not yet been signed. The delay in finalizing the other financing sources has led to a short-term pressure on the Company's liquidity.

Upon completing the equity and bond issue and the pre-payment facility with Stemcor, the Company expects to be fully funded through the minimum cash point and until full production from Tapuli is expected to be achieved in the third quarter of 2014.

Changes to operational expenditures ("Opex")

A breakdown of the operating assumptions and variance between the DFS update from February 2012 and the new assumptions are shown below:

Main operating assumptions

	DFS Update Feb 2012	January 2013
Realized price FOB Narvik (USD/dmt)	151	130
Production volume 2013-2014 (million dmt)	3.7	4.5
USD/SEK	8.125	6.90
Opex/dmt 2013 (USD)	62	118
Opex/dmt 2014 (USD)	55	83

The expected realized price FOB Narvik has been reduced from USD 151/ dmt to USD 130/dmt, while the expected production volume in the 2013-2014 period   has been increased from 3.7 million dmt to 4.6 million dmt. The SEK/USD foreign exchange rate has been revised from 8.125 to 6.90. The estimated Opex for 2013 is revised up from USD 62/dmt to USD 118/dmt, and from USD 55/dmt to USD 83/dmt in 2014.

Based on these new assumptions, the net EBITDA effect in 2013 and 2014 (calculated as the difference between the original budget and the management's current budget for the period 2013-2014) is estimated to be negative USD 181 million, consisting of the following items:

Total EBITDA*variance breakdown 2013-2014

	USD million
Price	(76)
Volume	106
Opex	(211)
Total	(181)

* Variance is based on the budget price assumption, and does not represent a forecast. Realized price depends on market prices, and price and EBITDA variance may therefore differ substantially from the budget assumption. EBITDA variance differs from operating cash flow variance due to differences in time period and change in working capital.

The details of the estimated negative USD 211 million in Opex effect in 2013-2104 are described below:

Opex variance breakdown 2013-2014

	USD million
USD/SEK	(64)
Volume	(44)
Logistics chain	(36)
Logistics G&A	(13)
Mining & Processing	(54)
Total	(211)

Update on operating costs expectations

In the budgeting process, the Company has rebuilt its Opex budget bottom-up, taking into account actual mining cost experiences and actual cost-structures derived from signed contracts.

The budget shows a higher operating cost in the ramp-up phase as a larger share of operating costs than anticipated were fixed costs, which will be split on lower volumes in the ramp-up phase, and added costs of intermediary solutions in the logistics chain. However, the budget also supports the long-term operating cost (in SEK) from the DFS, and LoM Opex approximately equals DFS cash cost adjusted for USD/SEK exchange rate changes. See below table for expected development of operating cost (USD/dmt) during the ramp up and LoM:

Operating cost during ramp-up (USD/dmt)

The revised total Opex per ton following the up date in January 2013 for the LoM operation is estimated to be USD 67.1 per dmt of concentrate) delivered Free On Board ("FOB") to the Port of Narvik, Norway. This compares to USD 64.4 per dmt in the DFS Update February 2012 (both numbers assuming USD/SEK 6.90). A comparison of the current and previous estimates is shown in the table below:

Life of mine operating costs (USD/dmt)

	February 2012 Update(USD/SEK 8.125)*	January 2013 (USD/SEK 6.90)
Mining	18.4	21.9
Processing	12.5	14.4
Maintenance	0.4	0.9
G&A	1.4	1.3
Logistics	22.4	28.3
Royalties	0.4	0.4
Total	55.4	67.1

*DFS 2012 LoM operating costs USD 55.4 adjusted for USD/SEK of 6.90 is USD 64.4

Update on total capital expenditure changes since February 2012

By way of background, the Company elected to commence construction two years ago before all detailed engineering work was finalized and before the entire logistics chain was fully contracted. This was done to secure the delivery of key long lead time items in a tight market environment, allowing production to start 12-18 months earlier than otherwise achievable. While the Company continues to believe this was the right decision, cost overruns in Capex have been identified.

The projected Kaunisvaara project and associated logistics Capex is now expected to be USD 1,096 million (including USD 11 million in Capex contingency), versus USD 875 million as communicated in February 2012, resulting in an increase of USD 222 million. Please see also the graph below:

Projected Kaunisvaara project and logistics development Capex until December 31, 2014

825

696

The increased Capex of USD 222 million relates primarily to the decision not to undertake detailed engineering prior to commencing construction in order to accelerate execution and enable ordering of key lead time equipment, scope and engineering adjustments, as well as increased material quantities and unit prices.

The main contractual variances are described below:

Main contractual variances since DFS Update 2012

• USD 51m   Civil works
• USD 57m   Various logistical works
• USD 42m   Installation and infrastructure works
• USD 33m   Norwegian rail upgrade
• USD 23m   Overburden removal Tapuli mine
• USD  5m    Electrical installation
• USD 222m    Total Capex variance*     

* Including USD 11 million in additional contingency on unawarded works to end of 2014

As at year end 2012, USD 675 million had been spent on Capex. The total remaining Capex in 2013 is estimated to be USD 283 million, and USD 138 million in 2014, for an estimated total Capex of USD 421 million, including contingencies, as shown in the graph below:

Projected Kaunisvaara project and logistics development Capex until 2014

Note:          1) Excluding rail cars which are treated as an operating lease

In addition, the Company estimates additional Capex in 2015 and 2016 related to the development of Sahavaara mine (including flotation circuit, overburden removal, civil works, crushing station and conveyors), estimated to be between USD 120-130 million.

Of the estimated USD 421 million in 2013 and 2014 Capex, USD 328 million has been committed mainly to fixed price contracts in USD, while USD 82 million remains uncommitted. See table below:

Breakdown of expected remaining Capex until end of 2014

Committed Capex	Contract Currency	USD million
Process systems and electrical installation	USD	124
Mobile mine equipment	USD/EUR/SEK	55
Civil works Kaunisvaara	SEK	40
Civil works Narvik	NOK	38
Tapuli mine overburden	SEK	15
Shiploader	EUR	32
Norwegian rail upgrade	NOK	24
Total committed		328
Uncommitted Capex	Contract Currency	USD million
Process system installation, increased costs	USD	31
Water systems, phase 2	EUR	4
Tailings Management Facility	SEK	15
Civil Works second process line	SEK	10
Investments operations	SEK	10
Project team	SEK	12
Total uncommitted		82
Additional contingency		11
Total Capex		421
Note: USD million is based on FX USD:SEK 6.90 , USD:EUR 0.77 , USD:NOK 5.73
The USD 11 million in contingency amounts to 13 percent of the uncommitted Capex. 48 percent of expected remaining Capex is denominated in USD. Capex excludes rail car Capex of USD 33 million, assumed to be financed on an operating lease for which a term sheet has been signed, which is subject to inter alia credit committee approval and documentation.

Financing breakdown

Please see expected sources and uses table below

(from January 1, 2013 to December 31, 2014):

Sources and Uses (January 1, 2013 - December 31, 2014)

As of December 31, 2012		USD million
Opening cash balance1		37
Capex excluding contingency2		(410)
Interest and fees of current financing		(101)
Net release from debt service reserve account ("DRSA")		25
Operating cash flow until July 31, 2014		94
Net drawdown and repayments current leases		43
Cash pre financing		(312)
Cost of new leases		(5)
Added interest cost and transaction fees		(48)
Additions DSRA		(14)
Contingency		(46)
Total funding need		(425)
Stemcor prepayment facility		50
Bond tap issue		125
New equity issue		250
Total funding sources		425
Shiploader lease (net of fees and leasing costs)	18
Notes to expected sources and uses table:1) Including remaining group cash and new USD 20 million bond from December 20122) Excluding rail car Capex of USD 33 millionUSD 5 million cost of new leasesis Opex for rail car operating leaseUSD 48 million added interest cost and transaction feesincludes USD16 million equity, legal, advisors; USD 6 million bond and consent fee to bondholders; USD 24 million Bond interest /tap issue DSRA; and USD 2 million pre-payment interest and fees.USD 46 million contingencyincludes USD 28 million foreign exchange contingency (current USD/SEK spot rate of 6.50 vs. budgeted 6.90); USD 11million additional contingency for uncommitted Capex; and USD 7 million of additional contingency.Stemcor prepayment facility:Signed term sheet for a prepayment facility of up to USD 50 million, whereby Stemcor will immediately forward payment for 80 percent of the volume (subject to certain conditions) for the following quarter based on invoices sent from the Company.Shiploader lease: Signed term sheet in place, awaiting credit committee approval and documentation. If approved, would add USD 18 million of contingency.Standard Bank Cost Overrun Facility: A signed agreement for USD 40 million is in place, but would as a result of the contemplated USD 125 million bond tap require renewed credit committee approval.

Based on the above, the full expected sources and uses is presented below (Kaunisvaara Sources & Uses is compared to what was presented in February 2012)

Northland Resources S.A. Equity Issue Sources & Uses

Sources(USDm)	Amount		Uses (USDm)	Amount
Equity January 2013	250		Kaunisvaara project	204
Group cash balance	20		General & Administration	40
			Exploration and Hannukainen	10
			Transaction costs	16
Total	270		Total	270

Kaunisvaara Sources & Uses from Project Start to December 31, 2014

Sources (USDm)	Feb 2012	Jan 2013		Uses (USDm)	Feb 2012	Jan 2013
Contributed equity to Kaunisvaara1	262	542		Acquisition, exploration and development6	82	82
New equity to Kaunisvaara1	250	204		Capex Kaunisvaara7	629	825
Intercompany Loan (to be converted to equity)1	38	-		Capex logistics8Additional contingency9	17967	26011
Total equity	550	746		Total Capex	875	1,096
Existing Bond2	-	370		Transaction costs10	26	40
New Bond2	350	125		Prepayment facilities11	-	2
Equipment leases3	58	73		Bond DSRA and interest12	152	194
Prepayment facilities4	-	50		Equipment leases13	29	33
Total debt	408	618		Contingency14	56	35
Net operating cash flow5	262	118
Total	1,220	1,482		Total	1,220	1,482

Notes to sources and uses:

1.   Total cash from equity raised by Northland in the form of capital contributions and intercompany loans

2.   USD 350 million bond raised in February 2012 and USD 20 million bond raised in December 2012.
USD 125 million new bond tap

3.   Caterpillar USD 65 million and Atlas Copco USD 8 million

4.   Stemcor pre-payment facility of up to USD 50 million (subject to certain conditions), term sheet signed but not final

5.   Net operating cash flow generated by operations from project start to 2014E

6.   Pre-construction phase costs, exploration, preliminary economic assessment studies, definitive feasibility studies

7.   Investments related to the Kaunisvaara area development including mine stripping, civil works, buildings, infrastructure, process and water systems

8.   Investments related to the full development of the logistical chain including re-loading terminal in Pitkäjärvi, storage facilities, Narvik port infrastructure, rail works and shiploader

9.   Additional contingency used to cover accrued apex increases, approx. 13 percent of uncommitted Capex added as additional apex contingency

10. Fees, legal and other costs related to historical and current financing transactions

11. Fees and interest related to the Stemcor pre-payment facility

12. Interest and escrowed cash for the USD 350 million bond and the USD 20 million bond. Including escrowed cash for interest and amortization in March 2015

13. Interest, fees and repayments for Caterpillar and Atlas Copco

14. Additional headroom for uncommitted Capex, FX risk and other headroom

PRODUCTION UPDATE

The Tapuli mine commenced production during the fourth quarter of 2012, while still in commissioning phase, with expected production of 1.5 million dmt of concentrate in 2013 and 3.1 million dmt of concentrate in 2014. These production figures are significantly increased since the 2011 DFS and the 2012 DFS update production schedule as a result of further detailed mine planning and the shortened plant ramp up for the second process line.

Production in 2015 is forecast to be 3.9 million dmt of concentrate and in 2016, Tapuli production is expected to be 3.1 million dmt, while Sahavaara is expected to produce 0.7 million dmt. From 2017, the combined production is expected to be approximately 4.4 million dmtpa of concentrate from the two mines. See figure below for the full planned project sequence over the initial years. By applying this sequence to the project the Company is expected to achieve almost full planned concentrate production through 2015 while benefiting from delayed Capex and mitigated exposure to any possible delay in the Sahavaara permit.

Expected - New Plan Jan 2013 - concentrate production sequence, million of dry metric tonnes.9

3.1

Production assumptions

	Expected - February 2012			Expected - New Plan Jan 2013
Year ending December 31	Total ore mined (milliondmt)	Concentrate produced (milliondmt)		Total ore mined (million dmt)	Concentrate produced (million dmt)
2012	-	-		0.14	-
2013	4.49	1.33		4.60	1.47
2014	8.20	2.29		9.18	3.06
2015	11.12	3.93		11.12	3.93
2016	12.00	3.80		12.00	3.80

Possible increase in production from Tapuli

The Company has, in cooperation with suppliers and external engineering consultants examined the possibility of increasing production from Tapuli above the production targets set out above. This can take place by upgrading the VertiMills, magnetic separators and filters, as well as other smaller adjustments to the process line.

Based on the current estimates, the Company believes that for a minimal increase in capital expenditure for upgrading the process, the Kaunisvaara project can produce additional 0.65 million dmtpa concentrate as of November 2013. See also the section "Further Growth Potential" below.

Based on the current estimates, the upgrade is expected to cost approximately USD 10 million in total, and the upgrade can take place in the third quarter of 2013. The mining review for the study has been done internally and is based on the existing reserve and resource report for the Tapuli mine. No decision regarding this investment and upgrade has been taken at this stage, and a separate news release will be given in due course once decided.

OPERATIONAL UPDATE

• Cold commissioning of the process plant is completed
• First production of concentrate has occurred
• Commissioning is ongoing, including rectification of minor items
• First concentrate has been trucked to new re-loading terminal in Pitkäjärvi, outside Svappavaara
• First concentrate has been transported by rail from Pitkäjärvi to Narvik, with the concentrate carried in rented box cars. As of the date of this release, approximately 4,500 tonnes of concentrate is stored in Narvik in a temporary storage shed
• About 30,000 tonnes of concentrate is expected to be loaded onboard the first vessel for shipment to Northland's off-take partner Tata Steel UK Limited. The vessel is scheduled to depart Narvik for IJmuiden in mid-February 2013

Mine and process plant

• The first production blast occurred on October 18, 2012
• The first Kaunisvaara process line was completed on schedule. Cold commissioning has been completed, and first concentrate has been produced. The second Kaunisvaara process line is 60 per cent complete as of mid-January and expected to be completed in third quarter of 2014
• During the ongoing commissioning the quality produced are meeting the specification achieved during the test works during the project study
• Three haul trucks, one wheel loader, two dozers and one grader have been installed at the mining site. Atlas Copco has delivered the second of the two drill rigs. Early in 2012, Northland awarded a contract for the purchase of the mine mobile equipment to PON Equipment AB for the supply of Caterpillar mine mobile equipment. The first batch of equipment has been delivered in line with ramp-up of mining operations. This contract covered the supply of the first batch of the mining haulage trucks, loading shovels as well as ancillary equipment. Subsequent to this contract, Northland procured adequate tires for the haulage trucks to mitigate the risk of potential supply shortages. The truck workshop has been completed.

The logistics chain

• The complete logistics chain is working well
• Road and rail interchange work has been completed at Pitkäjärvi
• Northland and its contractor Cliffton have obtained dispensation (to be renewed on annual basis) for operating 90 tonnes truck from the Swedish Transport Administration ("STA")
• STA has also allocated the four rail slots on the rail line from Pitkäjärvi to Narvik as was requested by Northland
• At the Pitkäjärvi re-loading terminal, all road works and the connection to the main rail line, including signals and monitoring systems, as well as the restorative work, have been completed. The concrete foundation for the storage area is completed and the storage tent has been raised
• Kiruna Wagon is continuing the manufacturing of the railcars contracted by Northland in accordance with the contracted time schedule. To allow for a quicker production ramp-up, the Company will during an initial period rent additional rail cars from a third party supplier
• The first wagon is expected to be delivered to Northland in first quarter 2013 with an estimated delivery of two rail cars per week thereafter
• The first 90 tonnes (gross weight) truck left Kaunisvaara on December 7 2012, loaded with concentrate destined for Pitkäjärvi
• The first train loaded with concentrate left Pitkäjärvi destined for Narvik during the weekend December 15-16, 2012
• The Swedish Government has committed to invest SEK 1.3 billion in the upgrading of the road 395, from Kaunisvaara to the re-loading terminal in Pitkäjärvi. The Swedish Government has also allocated in total SEK 1.3 billion to ensure sufficient capacity on the Malmbanan railway to accommodate for the expected increase in volumes from Northland, Luossavaara-Kiirunavaara AB and other customers.

The Port

•        Permits necessary for a temporary solution for the Fagernes Terminal in the Port of Narvik are in place.

•        Construction of the permanent jetty in the Port of Narvik[1]is progressing according to plan, and construction of the storage building is nearing completion

•        First shipments of conveyors for moving concentrate into and out of bulk storage arrived on site in December 2012

•        The Fagernes ship loader is expected to be delivered in July 2013

•        The Fagernes Terminal will be operated by Grieg Logistics AS

•        Boom stackers are expected to be delivered at end of January 2013

•        Northland has signed an agreement with the Norwegian National Rail Administration (Nw.: Jernbaneverket) to invest in the upgrade and capacity increase of the Fagernes rail line, connecting Northland's terminal, as well as the tracks in the terminal area. The investment will speed up the construction work, allowing the use of longer and heavier trains earlier than previously planned.

Health & Safety

Northland's main focus in 2012 has been to implement our policies into practice as a part of preparations for the commencement of production phase at Kaunisvaara. All of the Company's suppliers and contractors have been informed of the Safety & Environmental standards and evaluated against our social and environmental requirements. All contractors have agreed to comply with these standards.

Lost Time Injury Frequency Rate ("LTIFR") according to the Swedish standard [2]from the end of December 2011 until end of December 2012 was 3.81 (4.33) for the previous 

period that ended October 31.

• The corresponding number according the international standard[1]for the same period was 0.52 per 200,000 worked hours (previous period: 0.72)
• There was one LTIFR incident reported for both the International and Swedish standards during this period, November 1-December 31 (previous two-month period: three LTIFR incidents)
• A total of 40 near hits were reported for the same period (previous two-month period: 85 near hits).

FURTHER GROWTH POTENTIAL

The Hannukainen project

The Company is currently evaluating the possibilities of developing the brown-field Hannukainen project in Finland, which was acquired in 2005. The Company has since focused on exploring the potential for additional economic iron, copper and gold mineralization at Hannukainen. In May 2010, Northland announced a positive preliminary economic assessment ("PEA") on Hannukainen[2]. The Company plans to produce approximately two million tonnes per annum of iron ore concentrate per year and an average of 35,000 tonnes per year of Copper/Gold concentrate based on the PEA, based on an assessment of Hannukainen's NI 43-101 compliant resources.

Additional exploration target near Kaunisvaara

A third iron ore deposit, Pellivuoma, is located adjacent to Kaunisvaara. In the long term, Northland plans to develop this deposit in order to extend the Kaunisvaara project's life of mine materially, increase production or do a combination of both.

The Pellivuoma deposit is located approximately 18 km west of Kaunisvaara. The Company has reported, in the NI 43-101 compliant report "Mineral Resource Estimate for the Pellivuoma iron deposit, Pajala Municipality, Norrbotten County, Sweden, March 26, 2010 by SRK Consulting (UK) Ltd.", that Pellivuoma contains 38.5 Mt with 30.1 percent iron in the measured mineral resource category and 18.8 Mt with 29.9 percent iron in the indicated category. Additionally, the deposit contains 37.8 Mt with 29.3 percent iron classified as inferred mineral resources.

Postponed Hannukainen and Pellivuoma DFS release

Due to the current fund raising activities, the previously announced release dates for the Hannukainen DFS, as well as the Pellivuoma DFS, have been postponed until the contemplated financing transaction has closed. The Company expects to publish the Hannukainen DFS in the end of first quarter 2013 and the Pellivuoma DFS is expected to be published early in the second quarter of 2013.

Next Operational Update

The Operational Update for the most recent period is expected to be published on or about March 22, 2013.

Financial Statements and MD&A for the fourth quarter 2012

The Company will publish its financial statements and management's discussion and analysis for the period ending December 31, 2012, on February 12, 2013.

Data on Reserves and Resources

Information contained in this press release relating to estimated mineral resources for the Tapuli and Sahavaara ore bodies is taken from a press release prepared by SRK Consulting (UK) Ltd. dated October 3, 2010. Information relating to estimates of the mineral reserves for the Tapuli and Sahavaara ore bodies is taken from a technical report prepared by SRK Consulting (UK) Ltd. dated June 1, 2011 (the SRK Technical Report). SRK has not undertaken any further technical work subsequent to publication of the said technical report.

Qualified Person (QP)

Matthew J. Blattman, PE, Managing Director for Blattman Brothers Consulting LLC, is the Qualified Person as defined by the Canadian National Instrument 43-101 and the companion policy 43-101CP being responsible for approving that the information presented in this press release is accurate and has approved such information. Mr. Blattman is a Registered Member of the Society of Mining, Metallurgy & Exploration (SME) (RM #4059667) and Registered Professional Engineer in the State of Nevada, USA (MINE # 015254). Mr. Blattman is retained as a consultant of the Company and has verified that the results presented in this press release have been accurately summarized from the results reported to Northland.

"Karl-Axel Waplan"

President & CEO, Northland Resources S.A.

For more information, please contact:

Karl-Axel Waplan, President and CEO: [phone]

Peder Zetterberg, Acting CFO, [phone]

Anders Antonsson, Vice President - Investor Relations: [phone]

Northland is a producer of iron ore concentrate, with a portfolio of production, development and exploration mines and projects in northern Sweden and Finland. The first construction phase of the Kaunisvaara project is complete and production ramp-up started in November 2012. The Company expects to produce high-grade, high-quality magnetite iron concentrate in Kaunisvaara, Sweden, where the Company expects to exploit two magnetite iron ore deposits, Tapuli and Sahavaara. Northland has entered into off-take contracts with three partners for the entire production from the Kaunisvaara project over the next seven to ten years. The Company is also preparing a Definitive Feasibility Study ("DFS") for its Hannukainen Iron Oxide Copper Gold ("IOCG") project in Kolari, northern Finland and for the Pellivuoma deposit, which is located 15 km from the Kaunisvaara processing plant.

International Lost Time Injury definition: Absence of three shifts or more from regular duty following the accident. Reference period: 200,000 worked hours.

Technical Report on the mineral resource estimates and Preliminary Assessment of the Hannukainen Project, June 28, 2010

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• Northland to Address Funding Shortfall